FCC thinks it can overturn state laws that restrict public broadband

Wheeler points to dissenting court opinion to make his case.

When FCC Chairman Tom Wheeler announced his net neutrality plans today, he also said he wants to examine state laws that prohibit or restrict the ability of cities and towns to offer Internet service.

As we've written, ISP lobby groups have won restrictions on municipal broadband in 20 states, and they are trying to push through more such laws. Lobbyists and their lawmaker friends have been emboldened by a 2004 US Supreme Court decision that said the Telecommunications Act "allows states to prevent municipalities from providing telecommunications services," according to a summary of the case.

Further Reading

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But the situation isn't as clear-cut as that, it may turn out. Wheeler believes a dissent written by a judge at the US Court of Appeals for the DC Circuit gave the FCC some room to step between states and municipalities on this issue.

"The Commission will look for opportunities to enhance Internet access competition," Wheeler said in a statement. "One obvious candidate for close examination was raised in Judge Silberman’s separate opinion, namely legal restrictions on the ability of cities and towns to offer broadband services to consumers in their communities."

Judge Laurence Silberman dissented from his fellow judges in a 2-1 decision last month, arguing against the majority opinion that Section 706 of the Telecommunications Act gives the FCC authority to enforce net neutrality rules. (Separately, Silberman agreed with the majority opinion that the FCC had failed to justify common carriage rules.) However, Silberman wrote that the FCC does have authority to take "measures that promote competition in the local telecommunications market or other regulating methods that remove barriers to infrastructure investment.” In a footnote, Silberman wrote that "[a]n example of a paradigmatic barrier to infrastructure investment would be state laws that prohibit municipalities from creating their own broadband infrastructure to compete against private companies."

Silberman's opinion raises the possibility that the commission could remove state-level legal restrictions that prohibit or limit the ability of cities and towns to offer competitive broadband service, according to a senior FCC official who is familiar with Wheeler's thinking.

So what about that Supreme Court ruling? The official said that the case, Nixon v. Missouri Municipal League, involved a situation in which the FCC declined to support municipalities resisting state laws limiting public broadband. If the commission were to support municipalities against state restrictions in a future case, courts could interpret the laws differently, the official said. In the Supreme Court case, a group of local governments in Missouri asked the FCC to nullify a state law preventing municipal broadband service.

While many state restrictions on municipal broadband are already in place, new laws have been proposed in Kansas and Utah. Opposition has forced proponents of the bills to promise to rewrite them.